Helen Jan Ronner v Hi-Tech Park Homes Pty Limited and Ex Tech Constructions Pty Limited
[2014] NSWCATCD 186
•01 October 2014
Civil and Administrative Tribunal
New South Wales
Case Title: Helen Jan Ronner v Hi-Tech Park Homes Pty Limited and Ex Tech Constructions Pty Limited Medium Neutral Citation: [2014] NSWCATCD 186 Hearing Date(s): 14 August 2014 Decision Date: 01 October 2014 Before: A McMurran, General Member Decision: Hi-Tech Park Homes Pty Limited is to pay the applicant the sum of $22,568.00 immediately;
Catchwords: Contract termination; repudiation; damages Legislation Cited: Civil and Administrative Tribunal Act 2013 ("the Act")
Corporations Act 2001
Home Building Act 1989
Conveyancing Act 1919
Consumer Claims Act 1998
Civil Procedure Act 2005Cases Cited: Shevill v Builders Licencing Board (1982) 149 CLR 620
33 Electra Pty Ltd v Commonwealth Bank of Australia [2013] NSWSC 1076
Galafassi v Kelly [2014] NSWCA 190
Pavey & Matthews v Paul (1987) 162 CLR 221Texts Cited: Halsbury's Laws of Australia Category: Principal judgment Parties: Helen Jan Ronner (applicant)
Hi-Tech Park Homes Pty Limited (first respondent)
Ex-Tech Constructions Pty Limited (second respondent)Representation - Counsel: None - Solicitors: Mr W Kozlowski, Solicitor for first and second respondents File Number(s): HB 14/21140 Publication Restriction: Unrestricted
REASONS FOR DECISION
Background
The applicant is a home owner who resides at premises at ********* Street, Collaroy Plateau in Sydney ("the Premises").
The first named respondent, Hi-Tech Park Homes Pty Limited, is a corporation duly incorporated which carries on business constructing relocatable or portable homes. It carries on business at 1355 The Northern Road, Bringelly in Sydney ("Hi-Tech").
The second named respondent, Ex-Tech Constructions Pty Limited is a company duly incorporated and carrying on business as a licensed builder, engaged in the construction of first floor additions for residential properties. It also carries on business at 1355 The Northern Road, Bringelly in Sydney ("Ex-Tech").
Hi-Tech and Ex-Tech share a common director and appear to be related entities for the purposes of section 9 of the Corporations Act 2001, where the director of the first respondent, Brian Vibert, is also a director of the second respondent.
The applicant has resided in the Premises for many years and has a disabled son. In or about 2003, the applicant sought to develop more suitable accommodation for herself and her son at the Premises.
When dealing with the first respondent at the outset, the applicant was relying upon a Development Application 2003/0651 from Warringah Council, for the demolition of an existing dwelling and subdivision, a fact which the applicant made known to Hi-Tech and which is not disputed.
The applicant located the respondent, Hi-Tech, through internet enquiries and sought a quotation from Hi-Tech for the construction of a two bedroom home. In or about 2008, Hi-Tech had promoted a free inspection and quotation service and visited the Premises at the request of the applicant.
In or about September 2009, Hi-Tech contracted with the applicant to erect a prefabricated two bedroom home at the Premises. The applicant signed a contract with Hi-Tech on or about 27 September 2009, for a lump sum price of $50,195.00. The contract was described by Hi-Tech as the purchase of a Black Wattle manufactured two bedroom home to be installed at the Premises and being 39.69m2 in size ("the First Contract").
The First Contract describes a structure which is prefabricated at the Bringelly address of the respondents and then transported by road for installation at the Premises.
It is to be noted that the proposal to erect the dwelling was not in conformity with the original development approval granted by Warringah Council on 14 November 2003, which had provided consent for the demolition of an existing dwelling and Torrens Title subdivision, not a granny flat.
It was necessary therefore for the applicant to obtain further approvals from Warringah Council to enable completion of the First Contract.
In the period from 1 December 2009 to April 2011, there were communications between the applicant and Warringah Council seeking development approval for the construction. Some of these communications appear in the documents produced by the parties and were not disputed at the hearing.
Warringah Council for its part during this period raised issues concerning environmental storm water, sewerage connections and the erection of retention tanks as well as the location of the proposed dwelling on the site. This delayed the completion of the First Contract in that Council approval was not forthcoming.
In anticipation that the development would proceed, however, and to keep their agreement on foot, the parties negotiated a payment schedule and between 4 April 2011 and 5 May 2011, the applicant paid Hi-Tech a total of $22,568.00 in five instalments.
Those amounts were credited by Hi-Tech to the applicant on account of the First Contract, and recorded by it in the name of Helen Ronner.
On or about 6 June 2011 Warringah Council wrote to the applicant informing her that the Council declined the erection of a granny flat, which was not in conformity with Council's requirements. An email to the applicant on 6 June 2011 from the Council's Acting Manager, Phil Lane, confirms that:-
"Council has declined the granny flat because two water retention tanks cannot be built on your property."
Hi-Tech acknowledged that it could not proceed with the First Contract and wrote to its insurer, Australian Home Warranty, on 22 March 2012 confirming that the First Contract was "terminated by mutual agreement".
In that letter Hi-Tech confirmed that "no building works, levelling, clearing or demolition works, have been or will be carried out at the proposed building site", being the Premises. Hi-Tech sought a refund of premium paid for two certificates of insurance that had been issued by Australian Home Warranty pursuant to the First Contract.
The applicant determined to continue with her objective to develop the Premises. On or about 17 August 2012, the applicant received a quotation from the second respondent, Ex-Tech, for the supply and installation of a first floor addition to the existing dwelling. That was confirmed in a letter from Ex-Tech to the applicant dated 17 August 2012, showing a contract price in the sum of $128,134.00 on which was written "less money paid".
The applicant signed a document from Ex-Tech styled "Fixed Price Contract to Purchase a First Floor Addition" on or about 15 April 2013. The contract document noted that "this price includes the amount of $22,568.00 paid previously" ("the Second Contract").
The Tribunal notes that despite the words written on the document, the sum of $22,568.00 was not "paid previously" to the second respondent. It was in fact paid to the first respondent. That fact is not disputed, although the second respondent asserts that the funds were "paid" subsequently by way of assignment from the first to the second respondent.
Two sets of contract documents as provided to the applicant by Ex-Tech were signed by her and returned to Ex-Tech. On or about 6 September 2013, Warringah Council issued a development application approval, DA 2013/0834, for alterations and additions to the existing dwelling house at the Premises, and which approval allowed the construction of a dwelling in accordance with that proposed by the Second Contract, namely, a first-floor addition.
Between April and August 2013 however, things did not go well between the applicant and Ex-Tech in relation to the proposed first floor addition.
On 19 August 2013, the applicant was informed by letter that Hi-Tech had suffered financial loss as a consequence of manufacturing the applicant's granny flat pursuant to the First Contract, which Hi-Tech asserted "had to be resold at a considerable loss". In its letter, Hi-Tech agreed to refund half the monies paid to it by the applicant for the First Contract.
The letter purported to be a settlement of the First Contract between the applicant and Hi-Tech, whereby the applicant would receive from Hi-Tech a sum of $11,284.00 to "finalise the settlement" and "relinquish any further claim on Hi-Tech Park Homes Pty Limited".
That letter was signed by the applicant on 22 August 2013 and by Leister Vibert on behalf of Hi-Tech on 19 August 2013 ("the settlement letter").
The settlement letter came approximately 18 months after Hi-Tech had already acknowledged the First Contract had been terminated and without claim by either party.
Shortly prior to receipt of the settlement letter, Hi-Tech had written to the applicant on 14 August 2013, terminating any services from Hi-Tech and in which letter Hi-Tech informed the applicant "our services will no longer be available to yourself" ("the termination letter").
It was the applicant's evidence that it was on the basis of having received the termination letter that she agreed to sign the settlement letter, because she wanted to "get something back".
The applicant was never paid the agreed sum of $11,284.00 as per the settlement letter and in fact never received any payment from Hi-Tech at all.
Ex-Tech for its part never commenced construction at the Premises, nor has it carried out any building work on behalf of the applicant under the Second Contract. This is so, notwithstanding that Ex-Tech purports to have provided to the applicant a credit in respect of the sum of $22,568.00 as written on the contract document and which sum was apparently taken into account by Ex-Tech when calculating the amount due under the Second Contract for completion of building works.
The applicant has never paid Ex-Tech any monies in purported consideration for the Second Contract, or in respect of any progress payments. Ex-Tech did not make demand on the applicant for any progress payments during the Second Contract phase.
The Second Contract was silent as to a completion date or construction timetable and none was anticipated, as the Council's approval and construction certificate for the works had not yet issued. The Second Contract was silent as to any termination provisions and the termination letter made no mention itself of specific delay or breaches of the Second Contract by the applicant. It referred instead to "a vast amount of time and cost, and "indecisions and uncertainty" leading to "confusion" and "losses", as the reasons for termination of the Second Contract.
The applicant issued a Creditor's Statutory Demand under Section 459E of the Corporations Act, claiming the sum of $22,568.00 from Hi-Tech. That demand was subsequently withdrawn by the applicant in or about January 2014, by the Applicant's commercial agent.
The parties have been unable to resolve their differences in the meantime which have resulted in these proceedings.
The Application
These proceedings were commenced by application filed 15 April 2014. The applicant seeks an order against the respondents for payment of $22,568.00. The matter comes within the jurisdiction of the Tribunal in its Consumer and Commercial Division.
The matter came on in a Group List for hearing on 21 May 2014, when directions were made for the exchange of documents.
Both parties exchanged documents in accordance with the directions and provided written submissions.
At the hearing on 14 August 2014, the applicant appointed a commercial agent, Mr Peter Trayhurn to act on her behalf and leave was granted without objection to Mr Trayhurn for him to appear.
The respondents sought leave to be represented by a solicitor, Mr W Kozlowski, who was also granted leave and appeared for the respondents.
At the hearing, the applicant gave sworn evidence and was cross examined.
Similarly, the respondents' witnesses gave sworn evidence from Joe Galea, Dean Vibert, Richard Sheppard and Lawrance Crestani. The Tribunal will refer to the evidence of those witnesses in the paragraphs following. The first respondent, Hi-Tech, filed a document styled "Defence and Reply to Applicant's Points of Claim", denying it was indebted to the applicant in the sum of $22,568.00, or at all.
Hi-Tech says that the applicant caused the employees of Hi-Tech to attend the Premises on a number of occasions for site inspections and that in the end the First Contract was "frustrated" when the applicant failed to obtain approval for a development application for the construction of a granny flat.
It is common ground between the parties that the applicant had responsibility for dealing with Council for development consent and approvals. Prior to these proceedings, Hi-Tech made no claim of frustration of the First Contract levelled at the applicant and had agreed to terminate that contract without claim.
The payments by the applicant to Hi-Tech in the sum of $22,568.00 are admitted and on the basis that Hi-Tech says those payments were for the construction of the granny flat, pursuant to the First Contract.
The granny flat, the subject of the First Contract was built by Hi-Tech but never installed on site. Hi-Tech says that it further constructed a second granny flat called "Black Wattle" between June 2010 and June 2011, which it stored at its premises, ready for delivery and installation. It was in or about June 2011 that the applicant informed Hi-Tech that the development approval was "rejected" and that the First Contract could not proceed.
The response from Hi-Tech however, notes in its Defence document, that the payments received by Hi-Tech under the First Contract totalling $22,568.00 were to be "assigned" by Hi-Tech to Ex-Tech in order for Ex-Tech to apply that sum towards the costs of the Second Contract.
Hi-Tech says that having consented to the assignment of the sum of $22,568.00 as an "offset" for the Second Contract, there was nothing for Hi-Tech to refund to the applicant.
Hi-Tech has brought no proceedings or cross claim to recover any payments from the applicant.
There is no evidence of a formal written assignment by the parties of any amount at all, from Hi-Tech to Ex-Tech. The "debt" to be assigned was that due by Hi-Tech to the applicant, following rescission of the First Contract. The applicant owed no money to Ex-Tech and was required to consent to the transfer or assignment of any monies between the respondents, which otherwise the first respondent had agreed to repay to the applicant.
What appears to have happened in this instance is that both parties wanted the Second Contract to proceed and operated on the basis that the applicant would receive a credit for the monies paid by her for the First Contract, as opposed to a refund of those monies.
This "credit" was the amount referred to by the respondents as the amount "assigned". It was in fact a debt, since it was repayable to the applicant in full, there having been no claim made to those funds by the first respondent when the First Contract was terminated.
Section 12 of the Conveyancing Act, 1919 requires that an assignment must be in writing. It was the fact in this case that the parties never sought to affirm the transfer of funds formally as between the two company respondents. The parties operated on the basis that the applicant was entitled to a credit, or an "offset" as referred to by the respondents in the defences, and that amount would be recognised upon completion of the Second Contract.
The claim by the applicant against Hi-Tech for $22,568.00, the subject of a Statutory Demand, was withdrawn by the applicant and Hi-Tech argues the withdrawal was in recognition of the fact Hi-Tech owes no monies to the applicant. It is also said by Hi-Tech to be an acknowledgment by the applicant that Hi-Tech held no funds belonging to the applicant. The Tribunal rejects those submissions for the reasons which follow.
Ex-Tech asserts in its Defence that the Second Contract is a continuing contract and has not been terminated. This is so, notwithstanding the letter from Hi-Tech on 14 August 2013 asserting that "services will no longer be available".
Somewhat surprisingly, as the two respondents are related corporations having common directorship and being co-located, nonetheless, Ex-Tech asserts in its Defence that it "does not know and cannot know of payments were (sic) made by the First Respondent (Hi-Tech) to the Applicant".
The Hi-Tech letter of 14 August 2013 refers to "the first floor addition", which in fact was the Second Contract to be completed by Ex-Tech. The asserted defence of Ex-Tech that it "does not know and cannot know of payments were (sic) made by the First Respondent to the Applicant" is incorrect.
Ex-Tech by its own document in the form of the Second Contract dated 12 April 2013 and signed by the applicant on 15 April 2013, acknowledges the funds previously paid to Hi-Tech and that such funds were not returned to the applicant.
Applicant's Evidence
The applicant relied upon a number of documents including a bundle marked "Bundle No. 7" in the documents lodged with the Tribunal. In addition, the applicant relied upon a summary of submissions tendered by Mr Trayhurn at the hearing together with a witness statement made 23 May 2014, admitted without objection.
The applicant produced in evidence a number of emails which were not disputed. For example, from about October 2012, approximately 6 months after written confirmation that the First Contract was terminated, and up to April 2013, the first respondent continued to write to the applicant about the "upstairs new plan" and the building works clearly to be undertaken by the second respondent.
The emails are signed by Colleen Jones on behalf of Hi-Tech Park Homes Pty Ltd and also Joe Galea, who gave sworn evidence at the hearing and who in the email with the applicant described himself as "Senior Draftsman" for Hi-Tech. On 19 March 2013, Mr Galea sent an email from Hi-Tech stating "here are the structural drawings from our engineer", referring to the Second Contract.
The applicant sought to rely on these documents to show that she was dealing with both companies, which from her perspective were not at arm's length and that no care was being taken to remove Hi-Tech from any dealings after the First Contract was terminated. On the contrary, Hi-Tech employees were involved in preparing drawings for the Second Contract and so much seems evident from the representations and sign offs in the emails.
The Tribunal interprets this claim by the applicant to be relying also upon section 95 of the Civil Procedure Act, 2005, dealing with joint liability, and which provision applies expressly by virtue of section 12 of the Consumer Claims Act, 1998.
Respondents' Evidence
The respondents relied upon three folders of documents containing a defence for each of the first and second respondents, witness statements of each of Joe Galea, Dean Vibert, Richard Sheppard and Lawrance Crestani and bundles of documents in two separate folders including drawings and diagrams prepared on behalf of the applicant by each of Hi-Tech and Ex-Tech.
The applicant gave sworn oral testimony at the hearing as did the four witnesses for the first and second respondents.
The respondents maintained that as regards the two contracts, no construction work was done on the Second Contract by Hi-Tech. It sought to adduce oral evidence to that effect, referred to below.
The respondent's case was that the Second Contract had not been terminated at all, despite the letter from Hi-Tech, and that the letter from Hi-Tech was not binding on Ex-Tech.
The respondents did not attempt to explain however how it was that the first respondent performed work under the Second Contract, confirmed by Mr Galea and Ms Jones, and for which the second respondent went on to complain of "losses".
The identity of who actually carried out any work was sought to be addressed by the respondents in their affidavit material, admitted into evidence without objection.
Issues for Determination
The first issue for determination was whether or not the two contracts, or either of them, had been terminated and if so, the circumstances of the termination?
The second issue arises from the first, namely whether any termination of the contracts by the respondents gives rise to any damages to which the applicant might be entitled? In this instance, damages sought are the return of the funds paid by the applicant to Hi-Tech.
Such damages would be in the nature of compensation, as restitutionary damages, and must rely upon a finding that there was a repudiation by the respondents which requires any monies paid to be returned.
The First Contract
It is common ground that the applicant paid the first respondent, Hi-Tech, $22,568.00. The sum was paid to Hi-Tech in the context of the First Contract as payment towards the construction of a prefabricated granny flat.
It is further common ground that contract was not completed. The respondent, Hi-Tech, makes no claim in respect of the part payment of $22,568.00. Although the first respondent, Hi-Tech, complains that it constructed a granny flat at its factory, the construction was never conveyed to the Premises nor installed on the site. Instead, the contract was terminated by mutual agreement on or about 22 March 2012, as acknowledged by the first respondent on the basis "each party releases the other from any and all obligations under the contract".
In the Tribunal's view, nothing turns on the fact the letter of 22 March 2012 confirming termination of the First Contract was in fact addressed to William Kelso. At the time the letter was written, the applicant was in hospital as confirmed by the evidence given by the applicant. William Kelso was a person employed by the applicant as a full time carer for her disabled son and who lived at the Premises. It is unclear from the evidence what role, if any, Mr Kelso played in the First and Second Contracts which appear to have been at all times relevantly negotiated between the applicant and the first and second respondents. It is clear from the evidence and from the submissions of all parties that the contracts were made with the applicant, not with William Kelso.
The intent however, was clear, namely that the First Contract for the construction of the granny flat as a prefabricated dwelling was terminated and that intention was unequivocally conveyed by Brian Vibert as managing director for and on behalf of Hi-Tech. There was no dispute Mr Vibert had the requisite authority to terminate the contract.
The Tribunal accepts that the First Contract was so terminated on or about 22 March 2012, without any obligations remaining on either side.
It is further common ground in the evidence that Hi-Tech did not refund to the applicant all or any part of the part payment of $22,568.00. Instead, by letter dated 19 August 2013, Hi-Tech agreed with the applicant to refund only half that amount being the sum of $11,284.00 "during the first week of September 2013". Again it is agreed by all parties the sum of $11,284.00 was never paid by Hi-Tech to the applicant.
As at the hearing, the first respondent, Hi-Tech, has retained the total of $22,568.00.
The Second Contract
By further agreement between the applicant and Ex-Tech dated 12 April 2013, Ex-Tech agreed a contract price for the construction of a first floor addition and provided that the contract price would be "less money paid" and which was agreed by the parties as being the sum of $22,568.00 held by Hi-Tech as a result of the First Contract.
There was never any legal assignment from Hi-Tech to Ex-Tech from the applicant in accordance with the requirements of the Conveyancing Act, allowing for the sum of $22,568.00 to be transferred to Ex-Tech. No installation or building work in relation to the Second Contract was undertaken by Ex-Tech and no amount of the total price for that contract has been claimed by Ex-Tech. No cross claim was brought by Ex-Tech.
Four months after signing the Second Contract for the purchase of the first floor addition, that contract was terminated by letter dated 14 August 2013.
Some controversy arises because the letter was on the letterhead of the first respondent, Hi-Tech. In the Tribunal's view, however, it is clear that the letter intends to terminate the "request for the first floor addition" which is clearly the Second Contract. The Tribunal further accepts that a statement to the effect that "our services will no longer be available to yourself" is the equivalent of a statement of termination and can only properly be viewed in that context as the respondent repudiating their agreement.
The Tribunal therefore rejects the submission by the second respondent that the Second Contract remains on foot.
The applicant made clear that she accepted the termination by Ex-Tech of the Second Contract. The applicant then made claim on Hi-Tech for a refund of the payments made by her and totalling $22,568.00. The first attempt to recover that sum against the first respondent was by way of Creditor's Statutory Demand issued by the applicant in January 2014 but subsequently withdrawn.
These proceedings then continue that process whereby the applicant seeks to recover the payments made from the respondents.
Contract Termination
Both parties submit that the First Contract has been terminated, which is confirmed by the letter from Hi-Tech dated 22 Mar 2012 and accepted by the applicant. No issue arises as to the manner in which notice or acceptance was given by either party. The contract was effectively rescinded.
As to the Second Contract, the applicant submits the contract was repudiated upon receipt of a letter from Hi-Tech (the termination letter) stating that no further services would be provided.
The second respondent in submissions, confirmed orally at hearing by Mr Lawrance Crestani, which evidence is referred to later in these reasons, asserts that it did not know of the termination letter. The termination letter was signed by a director of Ex-Tech, Mr Brian Vibert, on 14 August 2013 and then followed up by the settlement letter signed for Mr Brian Vibert as managing director of Hi-Tech, by Mr Lester Vibert. The authority of Mr Lester Vibert to sign the letter is not stated and neither Messrs Vibert were called to give evidence.
The second respondent asserts the Second Contract remains on foot and the second respondent is ready, willing and able to complete that contract, and subject to payments already made by the applicant. The particulars of any further payments to be made, whether progressive or otherwise were not made clear at the hearing. But it was common ground that the building work at the Premises had not commenced.
Where there is uncertainty as to contract termination by conduct, the Tribunal must have regard to the relevant legal principles. In this case, the primary evidence of termination is the termination letter from the managing director.
In the seminal judgment of Shevill v Builders Licensing Board (1982) 149 CLR 620, the Chief Justice refers to the following statement of principle, referenced more recently in 33 Electra Pty Ltd v Commonwealth Bank of Australia [2013] NSWSC 1076 at paragraph 111 by Sackar J:-
"...a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way. In such a case the innocent party is entitled to accept the repudiation, thereby discharging himself from further performance and sue for damages..."
The applicant submits the termination letter was in fact a repudiation of the Second Contract, which she accepted.
The Home Building Act1989 is itself silent as to termination, other than by reference to the requirement for the parties to have a written contract, which itself is to make provision for termination events. The Second Contract is silent as to a termination event or formal notice.
The Tribunal is required to have regard to all the facts and circumstances of this case in deciding whether the acts of either or both respondents were in fact binding and whether those acts amounted to a repudiation of the Second Contract which the applicant accepted.
Halsbury's Laws of Australia notes that:-
"Conduct amounting to repudiation does not need to fall within a verbal formulation of an absolute refusal to perform the contract".
In this case, the applicant was given as clear an indication in writing as could be envisaged by the termination letter of an absolute refusal to perform the Second Contract, and, that the Second Contract would not be completed at all. Halsbury's goes on to say a party is "not willing where ...he or she has resolved not to perform those acts which he or she is obliged to perform". There can be no clearer statement than appears in the termination letter of an unwillingness to "perform".
Until receipt of the termination letter, the applicant wished to continue with the Second Contract. The applicant's evidence, which the Tribunal accepts, was that she was at all times dealing with Warringah Council to obtain the necessary approvals and construction certificate. The construction certificate from the Council arrived a short time after the termination letter and is still current.
In Galafassi v Kelly [2014] NSWCA 190, the Court of Appeal discusses the relevant principles of termination and His Honour the Chief Justice notes in that instance at paragraph 67 that:
"The message conveyed by the unretracted declarations of the Purchasers was plain....(their) conduct could only be understood as having conveyed to a reasonable person in the position of (the applicant) renunciation of the contract as a whole....the inescapable conclusion is that there was a continuing repudiation by the Purchasers...which the Vendor was entitled to accept and terminate the Contract."
Likewise in this instance, the Tribunal is of the view that the "inescapable conclusion" from the termination letter is that the second respondent was renouncing any intention to be bound by the Second Contract and effectively repudiated that contract, which repudiation the applicant accepted. Such repudiation in the circumstances of this case would ordinarily entitle the applicant to restitutionary damages, being the return of monies paid, unless the applicant herself was in breach. The Tribunal finds there was no evidence of any breach by the applicant of the Second Contract.
Authority to Terminate Second Contract
The termination letter from Hi-Tech is signed by the Managing Director and refers to "our services". In the absence of any persuasive evidence to the contrary and applying the usual civil test as to probability, the Tribunal interprets this to mean that the services being terminated were those of Ex-Tech. The First Contract had already been terminated by consent and there remained only the Second Contract on foot. No other "services" were to be provided, other than in connection with the Second Contract.
Furthermore, both respondents were operating in tandem, in accordance with the meaning of "joint liability as set out in section 95 of the Civil Procedure Act. When the First Contract ended, Ex-Tech stepped in and was prepared to execute the Second Contract, accepting that it was entitled to monies already paid to Hi-Tech and to credit those monies against its quoted contract price.
When you take into account that the two respondents worked side by side at the same address sharing a common director in Brian Vibert and the reference to "our services", it is logical to conclude that Hi-Tech was in fact authorised by its related corporation to terminate the Ex-Tech contract.
For these reasons, the Tribunal is satisfied that the Second Contract was in fact terminated notwithstanding the use of Hi-Tech's letterhead to achieve that result and that in the circumstances of this case the termination was a repudiation by the respondents, which repudiation the applicant accepted.
The Evidence
In cross examination, the applicant denied that any work had been commenced on site at the Premises by the respondents. Although employees of the first respondent had attended at the site with a view to site preparation, the applicant gave evidence that no work in fact had been commenced by the first respondent in that regard.
The Tribunal accepts this evidence. The Tribunal formed the view that the applicant was a forthright witness who gave the evidence as best she could and without equivocation. The Tribunal accepts that she was a truthful and accurate witness.
The applicant conceded in cross examination that some building work had been done at the site including taking out a kitchen and lounge room and "rejigging" a hallway. That work however, was not performed by either of the respondents. The applicant also asserted in her evidence such work was undertaken after the Second Contract had been terminated. The applicant in her evidence confirmed that the construction certificate in respect of her development application as approved by Warringah Council did not issue until 31 October 2013, after the respondents had indicated "our services will no longer be available".
Given the circumstances of this case where Hi-Tech and Ex-Tech, although separate legal entities, have acted in concert in respect of dealings with the applicant over the First and Second Contract, the Tribunal accepts that Hi-Tech as at August 2013 was in a position to inform the applicant on behalf of the respondents that "our services" would not be provided.
The Tribunal is of the view that the use of Hi-Tech letterhead by Ex-Tech does not vitiate the termination of the Second Contract and the Tribunal rejects the submission that the Second Contract remained on foot. The applicant's oral evidence at the hearing, which the Tribunal accepts, supports the view that both respondents acted on the basis that the first floor addition was not proceeding, after the termination letter was received. Neither respondent attempted to carry out any further work.
The solicitor for the respondents asserted at the hearing that the Second Contract could still be completed. This submission was based on the evidence in part of Mr Crestani. Mr Crestani who was the operations manager for Ex-Tech, gave evidence that he was unaware of the termination letter from Hi-Tech dated 14 August 2013. Mr Crestani was of the view that the contract with Ex-Tech for the first floor addition remained on foot.
Mr Crestani gave evidence that Mr Vibert who was the managing director who signed the termination letter at the time was unwell. It was not suggested however, that Mr Vibert was not in a position to nor did he lack the authority to terminate the contractual services offered to the applicant for the first floor addition, as he was a director of both companies.
None of the witnesses called by either of the respondents was in a position to clarify what had happened to the sum of $22,568.00 paid by the applicant. No financial documents were produced in evidence such as receipts or ledgers or bank statements by either respondent. There was no evidence to contradict the applicant's assertion the funds had been paid to Hi-Tech and remained with that entity. The settlement offer for acceptance of half that sum in full and final settlement was never effected.
Findings
The Tribunal finds in relation to the first issue that the First Contract was terminated by mutual consent and confirmed by letter dated 22 March 2012 signed by the managing director, Brian Vibert.
That letter was addressed to Australian Home Warranty and designed to recover a refund of premiums paid in respect of cancelled insurance. Although signed on behalf of the applicant by WS Kelso, the acceptance of that termination was adopted by the applicant both in her evidence and orally at the hearing. There is no evidence to suggest that the First Contract was not properly or validly terminated by agreement reached between the parties.
The Tribunal finds that in relation to the Second Contract, entered into on or about 12 April 2013, the second respondent, Ex-Tech and the applicant intended that the applicant would receive a credit in respect of funds held by the first respondent. The amount of the credit was for the full amount of $22,568.00 "paid previously" as indicated on the written agreement.
The Tribunal finds there is no evidence this sum was ever paid by Hi-Tech to Ex-Tech, or that this sum was lawfully assigned from Hi-Tech to Ex-Tech. Although it was possible by the agreement of the parties for this to occur, there is no evidence in fact of the transfer or assignment of the funds from one company to the other. There is merely the notation that the price for the Second Contract was to include a credit for that sum.
The quotation for the Second Contract was a lump sum amount never claimed nor paid, and the credit in respect of the sum of $22,568.00 was also never shown to have been paid by Hi-Tech to Ex-Tech on account of the Second Contract.
The Tribunal finds that the sum of $22,568.00 is still held by Hi-Tech pursuant to the payments made under the First Contract between 4 April and 5 May 2011. It is not disputed those amounts have never been refunded to the applicant by either respondent.
The Tribunal is satisfied to the usual civil standard on the balance of probabilities, that the agreement between the parties as evidenced by the letter of 22 March 2012 was an agreement for each party to release the other from any obligations under the First Contract and that such agreement by implication included a full credit to the applicant for payment of the total sum of $22,568.00.
The Tribunal finds the Second Contract confirms this arrangement by providing for that sum as a contractual term being described as "the amount paid previously" and secondly as "less money paid".
The Tribunal rejects the assertion of the second respondent, Ex-Tech, that Hi-Tech did not properly terminate the Second Contract and that the letter of 14 August 2013 still leaves the Second Contract on foot. As indicated above, the evidence taking into account all the facts and circumstances clearly demonstrates that the second respondent was not prepared to continue to carry out any further work for the applicant. That is the inescapable conclusion. The Second Contract was repudiated by the respondents.
Notwithstanding attempts by the applicant to recover the amount of $22,568.00, the first and second respondents have denied any liability for repayment of that sum. The first respondent, on the basis that it had "assigned" that amount in full to the second respondent, and the second respondent, by its termination letter of 14 August 2013, on the basis that "a vast amount of time and cost has been wasted" and that "your payment of $22,568.00 will be offset against losses incurred by Hi-Tech Park Homes Pty Limited".
The respondents assert a quantum meruit claim in their defences for work done and services provided, relying upon the principle of unjust enrichment, where the applicant has received a benefit for which she is unwilling to pay.
To support this claim, the respondents rely upon the evidence of its employees to demonstrate the work carried out on behalf of the applicant. Mr Dean Vibert gave evidence as the transport and installation manager of the work done by him to attend the site at the Premises on a number of occasions in order to determine what vehicle would be required for delivery of the prefabricated dwelling. He gave evidence of at least three site visits and charged an hourly rate in respect of those visits.
No evidence of any professional fees or charges rendered by the applicant in respect of those amounts, however, was produced by the first respondent.
Mr Galea gave evidence as a senior draftsman of his role in preparing drawings. Again, Mr Galea gave evidence of his hourly rate and his estimate of the time that he believes he spent working on the project for the applicant. No evidence was produced of the time recorded other than the statement made by the witness, which made reference also to bundles of emails dealing with the design requests and requirements.
In the Tribunal's view, this evidence does not establish to the requisite civil standard any obligation on the applicant to make payments when the First Contract was terminated with a full release to each party, as per the letter of 22 March 2012. At the hearing, the respondents did not attempt to argue that the "release" in the settlement letter was not valid or did not apply.
Mr Richard Sheppard gave evidence as a manager for the second respondent, Ex-Tech, and states that "quite an amount of time was wasted" in dealing with the applicant. The witness says he prepared designs but found that the applicant "was very confused about what she wanted". This witness was giving evidence in relation to the Second Contract. The witness says nothing about that contract remaining on foot, or what he anticipated will be further requirements of him in relation to completion of that contract.
The Tribunal is of the view that this evidence is not persuasive in terms of any claim by the second respondent for a quantum meruit, or for an "offset" against the return of funds claimed by the applicant.
Such a claim for an "offset" is not a true quantum meruit. Both contracts had been terminated, the first by consent, and the second by repudiation by the respondents. There was no contract or claim left on foot to enforce (see Pavey & Matthews Pty Limited v Paul (1987) 162 CLR 221). In both cases, no construction or building work of any nature had been commenced at the Premises, and so much was conceded by the respondents.
Pavey stands for the proposition that a true claim for quantum meruit relies upon a claim to restitution, based upon unjust enrichment. The evidence in this case does not establish that the applicant was "unjustly enriched" by any work done or carried out on her behalf by the respondents, or received a benefit retained by her when the contracts were ended and to which she was not entitled. The applicant was entitled to bring a claim for damages following contract termination.
The remedy for the respondents in these proceedings was to bring their own application to the Tribunal, there being no procedure for a cross claim as such, if either or both was of the view an amount was payable by the applicant. Neither respondent did so, although both respondents assert in their defences that work was done and services provided.
The Tribunal in any event finds there is insufficient evidence to the requisite civil standard that would support a finding that any amounts were due or owing by the applicant to either respondent, either as a consequence of termination of the contracts or as a quantum meruit.
Decision
In the circumstances, and taking into account the facts as agreed by the parties and the findings made by the Tribunal as set out above, the Tribunal is of the view that the first respondent, Hi-Tech, remains the repository of the funds part-paid to it during the course of the First Contract. In light of the termination of the First Contract and the agreement by the applicant and the first respondent that neither would have any claim against the other, those funds should be returned to the applicant in full.
The Tribunal therefore orders the first respondent to repay to the applicant the sum of $22,568.00 immediately. The Tribunal takes into account the provisions of section 95 of the Civil Procedure Act 2005 noting that the rights as between the respondents are preserved, once the first respondent makes payment of the amount now due to the applicant.
Section 95 provides inter alia that:
(1)If two or more persons have a joint liability and, in any proceedings, judgment on the liability is given against one or more but not all of them:
(a)The liability of the other or others of them is not discharged by the judgment or by any step taken for the enforcement of the judgment, and ...
(b)if there are two or more such persons against whom the judgment is not given, they remain, after the judgment takes effect, jointly liable amongst themselves, and
(c)if the judgment is satisfied wholly or in part by payment or recovery under execution, the liability of the persons against whom the judgment is not given is taken to have been satisfied in the amount of the payment or recovery.
In this instance and given the facts and circumstances of this case as outlined above, the Tribunal is of the view that both respondents have a joint liability to the applicant to ensure the deposited funds are returned. If it is the fact that the second respondent has received the funds already from the first respondent, which is not confirmed by the evidence, then the first respondent may have recourse to reimbursement from the second respondent. That is a matter, however, as between the respondents.
The Tribunal finds that the Second Contract has been terminated by repudiation, as evidenced in the termination letter, and which repudiation the applicant accepted. No valid reason for the repudiation has been established.
Where no fault has been proved against the applicant, the applicant is entitled to restitutionary damages upon repudiation of the Second Contract. The Tribunal finds such damages are negligible, where the first respondent has been ordered to pay the amount claimed by the applicant, and which amount equals all amounts previously paid by the applicant to the first respondent and credited by both respondents.
The amount available to the applicant as restitutionary damages from the second respondent would be no more than the amount ordered to be paid by the first respondent, and such amount cannot be paid twice.
No valid claims subsist by either respondent in these proceedings which relevantly would affect the order made for the first respondent to refund the monies to the applicant in full. To the extent either or both respondents make claims against the applicant in their defences, those claims are dismissed.
Costs
The parties each make claims against the other for payment of their costs and related expenses in these proceedings. The Act and Regulations make provision for the payment of costs in "special circumstances".
Section 60 of the Act sets out as follows:
(2)Each party to proceedings in the Tribunal is to pay the party's own costs.
(3)The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.
(4)In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following:
(d)Whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,
(e)Whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(f)The relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(g)The nature and complexity of the proceedings,
(h)Whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,
(i)Whether a party has refused or failed to comply with the duty imposed by section 36 (3),
(j)Any other matter that the Tribunal considers relevant.
The Tribunal, having regard to each of these provisions, finds no special circumstances exist in this case which would warrant the making of a costs order to any party and such application is dismissed. There will be no order for costs.
Orders
The first respondent, Hi-Tech Park Homes Pty Limited is to pay the applicant the sum of $22,568.00 immediately.
All other claims are dismissed.
A McMurran
General Member
Civil and Administrative Tribunal of New South Wales1 October 2014
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